AMB Property Corp. (AMB), a leading real estate investment trust (REIT), reported relatively modest third quarter results with strong leasing activities despite a challenging macroeconomic environment. During the quarter, AMB leased approximately 9.9 million square feet in its global operating portfolio along with 0.9 million square feet in the development pipeline. 
 
Fund from operations (FFO), a widely used metric to gauge the performance of REITs and obtained after adding depreciation and other non-cash expenses to net income, was $106.5 million or 71 cents per share during the quarter compared to $71.1 million or 69 cents per share in the year-earlier quarter. The year-over-year increase in FFO was primarily due to increased development gains and lower general and administrative expenses.
 
Occupancy in the operating portfolio of AMB increased 50 bps sequentially from the second quarter to 91% at the end of the third quarter. Same-store net operating income (cash basis), without the effect of lease termination fees, decreased 7% during the quarter compared to the year-ago period driven by lower-than-average same-store occupancies and rent changes on rollovers. Average rent change on lease renewals and rollovers in the operating portfolio of the company decreased 3.9% on trailing four-quarter basis.
 
During the quarter, AMB sold properties worth $209 million at a stabilized cap rate of 6.2%, realizing profit of $60 million. These included the sale of three development and value-added conversion properties in the Americas for $145 million, sale of four assets from the U.S. operating portfolio for $32 million, and transfer of two properties to AMB Alliance Fund III for $33 million. Year-to-date, AMB had sold $670 million worth of assets at a stabilized cap rate of 6.7%.
 
For the first nine months of 2009, AMB completed debt repayment and repurchase transactions totaling $1.1 billion, approximately $122 million of which were done in the third quarter itself. At quarter end, the company’s share of total debt (including joint venture debt) to total assets was 43%, with approximately $1.3 billion of liquidity.
 
Subsequent to the end of the quarter, AMB refinanced a $325 million unsecured term loan scheduled to mature in September 2010, and replaced it with a $345 million loan facility maturing in October 2012. The refinancing enabled AMB to include Euro and Yen multi-currency options in the loan facility. Furthermore, under the terms of the refinancing deal, AMB has the option to increase the loan facility to $425 million at any given point of time prior to October 2011.
 
At quarter end, AMB’s global development pipeline totaled over 6.8 million square feet with an estimated total investment of $547 million. The company narrowed down its FFO guidance for full year 2009 to $1.45 to $1.46 per share. With positive vibes emanating about the revival of global economies, AMB is well poised to capitalize on potential opportunities across the globe.
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